Regions Bank downgraded by feds, rated 'needs to improve'

Published: Feb. 25, 2016 at 4:09 AM CST|Updated: Mar. 3, 2016 at 1:56 PM CST
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BIRMINGHAM, AL (WBRC) - Regions Bank, Birmingham's largest private employer, cannot apply to open or buy new bank branches.  This limit on growth follows a downgrading in its Community Reinvestment Act rating. 
"It requires banks that have the benefit of FDIC insurance for deposits, to affirmatively serve the credit needs of people in their area, including specifically the needs of low and moderate income people," said Dory Rand, President of Woodstock Institute.

The bank currently operates 1,627 bank branches across the southeast.  The downgrading will not delay the opening of previously approved bank locations.

According to the bank's annual report filed with the Securities and Exchange Commission, its CRA status was downgraded from "satisfactory" to "needs to improve."

The downgrade comes from the bank wrongfully charging customers overdraft fees in 2015. 

Regions self-reported the overdraft issue, refunded $49 million to customers, and paid $7.5 million in fines.  

A downgraded CRA rating is not common.

"Ninety percent or more of the banks get satisfactory and outstanding ratings.  So it is relatively rare for a bank to get a 'needs to improve' rating," said Rand.

Jeremy King, of Regions Bank, said: "We continue to strengthen our commitment to provide financial services and investments to meet the needs of all the communities we serve, and our Community Reinvestment Act exam performance with regard to lending, service, and investments reflect those efforts."

Banks are required to maintain a CRA file, explained Rand.

"Any member of the public and any customer has a right to put a letter in the bank's CRA file," she said.  "So if anyone is having a problem with the bank or its service, or if they feel like they're not being fairly treated, they can put a letter in the bank's file that they are required to keep there," said Ward.

 Regions Bank will take the CRA exam again this year though an exact date has not yet been scheduled.  
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